Janwa

Problem Identification: Shanghai Jahwa Corporation needed to decide if they should enter or not into the shower cream market in China where they would probably end up clashing with entrenched competitors (multinationals). Also, if they decided to enter this market, they needed to make a decision about the brand name behind this new product (Would it be a product extension of one of its best performing brands (Liushen) or a new brand?).

Alternatives

Enter the shower cream market with the Liushen Brand

+ Personal care market was growing at a 35% rate average between 1985 & 1990 and it was expected to grow from RMB 6 millions to RMB 30 Millions by year 2000.

+ As economic theories sustain, China’s GDP growth could let us infer that the population is improving its personal income. This would mean that the consumers will tend to be more sophisticated and that they would have more disposable money available to buy other products (including personal care products).

+ Extensive sales and distributors network (24 regional offices) already established that could provide logistics support to the new product.

+ Growing urban population (with a better education and more exposure to the outside world and its products and trends) willing to try and spend (approx. 20% of income) on new products on the cosmetic and personal care market.

+ Shower cream could be targeted for a higher class segment allowing Jahwa to charge more for it and improve its contribution margin.

+ Liushen (the prescription) is a traditional Chinese therapy that is widely accepted by the population as a product that helps relieve all kinds of heat induced ailments. Jahwa positioned its Liushen brand as a natural and refreshing “eau de toilette” for the summer.

+ A market research performed by Jahwa determined that consumers identified the Liushen “eau de toilette” brand as a traditional and reliable product of high quality. High brand awareness was also detected.

+ According to some studies, people in China tend to shower 10 times more in the summer so the probability of using a shower cream during that season could be higher. Based on this information, Jahwa could leverage the positioning that the Liushen brand had.

+ Focus group research indicated that the Liushen brand reminded them of the summer and associated it with medical properties. Also some people said that it reminded them of the refreshing, mint fragrance of the Chinese prescription

- Although the category was increasing its share, it was not clear that shower creams fitted into the lifestyles of Chinese consumers.

- Jahwa is a state owned company focused on reducing costs instead of creating brand name products that could sustain competitiveness and generate higher profits over time (this tendency was being tried to be reversed).

- Entrenched competitor (Unilever) has market control and a pool of product well positioned and with a high quality image (significant media investment).

- There are rumors that other big multinationals wanted to enter this segment too (ie. P&G)

- Competitors placed their products in the “anti-bacterial” (P&G) and “used by celebrities” (Unilever) positioning.

- Possible joint venture between Unilever (market leader in shower cream segment) and a local producer in Shanghai in order to lower manufacturing costs. This could lead to some price reduction.

- Jahwa doesn’t have as much brand building expertise as the multinational competitors.

- Focus group research indicated that shower creams were not a widely